WASHINGTON, DC – JULY 24: U.S. President Donald Trump and Federal Reserve Chair Jerome Powell tour the Federal Reserve’s $2.5 billion headquarters renovation project on July 24, 2025 in Washington, DC. The Trump administration has been critical of the cost of the renovation and Federal Reserve Chairman Jerome Powell. (Photo by Chip Somodevilla/Getty Images)
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The Fed isn’t important. How could it be in consideration of the globalization of all production?
Despite this, the same Congress that created the Fed routinely blames it and its interest rate fiddling for slow economic times. Presidents do the same, and then economists who attain livelihood from the notion that what they do matters (the Fed employs more economists than any other entity in the world) add to the comical thinking that says what the Fed does with rates and so called “money supply” has an economic impact.
No, the Fed doesn’t count. It’s just not relevant to what’s happening in the real economy, and it never was.
If you’re doubtful about any of this, consider recent reporting from the Washington Post’s Aaron Gregg. Gregg cited data from Moody’s Analytics that indicates “Technology companies issued a record $108.7 billion in corporate bonds in the last three months of 2025.” If you’re reading this opinion piece, you know what this is about: as the transformative potential of artificial intelligence (AI) has become more apparent, along with the data centers that will give AI life, technology giants have raised enormous amounts of debt from lenders eager to finance what could be so growth enhancing.
Please remember this with past, present and future Fed commentary in mind. While economists, pundits and politicians place enormous amounts of stress on what the Fed will or will not do with interest rates, the real economy moves to an entirely different tune. Let’s start with the obvious after Fed official Stephen Miran’s recent call for four rate cuts.
If the Fed could make credit more plentiful with each reduction in the “Fed funds rate,” then price controls would work. But as we see with attempts by governmental entities to alter the real price of market goods (and yes, interest rates are a price), fake prices if anything result in scarcity.
Moving beyond the Fed’s vain attempts at credit price controls, it can’t be said enough that credit is produced by lender AND borrower. Let’s start with the lender. When they offer up “money” for loan, lenders are offering access to resources: think cars, trucks, desks, offices, WiFi, paper clips, and most important of all, labor. Which means lending is an effect of production whereby the productive shift surplus resource access to others in return for principal plus interest. Production (lenders) followed by relative parsimony followed by the productive attaining access (borrowers) to surplus by producing themselves.
Skeptical? If so, remember that on November 1, 2022 most Americans had never heard of AI, but by the close of the month it was on everyone’s mind. The creation of mechanized doing and thinking has lenders and investors eager to fund what could lift the economy in remarkable ways, which means credit access has grown to reflect the creation of what could be economically miraculous. Thought of another way, absent the unforeseen rise of AI, there wouldn’t be as much intrepid equity and debt issuance as there presently is.
What’s important about all this is that the Fed had nothing do with the equity and credit surge. What did was past production being matched with future production.
Remember this the next time the oh-so-serious act as though the Fed matters, and especially remember this as economists claim against all rationality that the Fed caused the 1930s, the early 1980s, 2008, 2018, and surely future downturns.
They’re all wrong because they’re all of the mind that what government does enables production. No, government is a production barrier, nothing else. In the Fed’s case, it’s just nothing.